Walmart is finally able to offer same-day grocery delivery…in Mexico!  In the United States, companies like Walmart and Amazon are in a competitive race to offer grocery delivery, especially same day.  Walmart is committed to matching Amazon’s service offerings within the next two years, even though only 2% of Walmart’s sales come from the Web.  With Walmart’s $466.1 billion in revenue in 2013, more than half is composed of grocery items.  Customers are used to picking out the freshest fruit, vegetables, and meet creating logistical challenges for same-day grocery delivery.  Online grocery stores are the “next frontier” for grocery retailers.

In Mexico, Superama, Walmart’s high-end grocery chain, delivers groceries in as little as three hours.  Walmart is betting big on the Mexican market as a “detonator for growth” and is looking to triple the number of stores offering grocery delivery in Mexico within the year.   Mexico is one of Walmart’s largest foreign markets, contributing $27 billion (or 6%) in annual sales.  Superama has helped Walmart dominate market share (92%) of online grocery shopping in Mexico.  E-commerce is successful in Walmart as the country has dense urban areas.  In Mexico, Walmart also uses portable credit-card terminals for deliveries so customers don’t have to enter credit-card information online.

Superama, began home delivery in 1993.  Managers would take orders by phone or fax.  As volume increased they created a web page and now a mobile application that accounts for 20% of Superama’s online orders.  Demand is highest in Mexico City where much of Mexico’s wealth is.  With traffic congestion and an increased number of dual-income families, the demand for grocery delivery is high. Superama’s target market is households with income of $3,000 a month which is 35% of the local population. Most of the deliveries are made by freelance drivers who get $1.50 per delivery using their own transportation and don’t receive health benefits directly from the company.  In the U.S., Walmart uses its own delivery-trucks.

Discussion Question:

Why is it easier for Walmart to profitably deliver to customers in Mexico than in the U.S.?

 

Source: Amy Guthrie and Shelly Banjo, Wall Street Journal, February 19, 2014